£1172 tax on 8,000 income does this sound correct?

[Pandemicpanic]

I have income from the rent of 8,000 per annum and I earn about 930 a month from work...After everything is taken out.

I set the work and rent to be paid separately... Does this sound correct?..

[QforCucumber]

What's your pre tax annual income from work?

[Pandemicpanic]

11803

[TiddyTid]

Quick calc in my head says that's probably correct

[DragonMamma]

Well that would be right. Your job uses up pretty much all of your personal allowance (£12.5k usually). Therefore you’ll be paying 20% tax on the rental income you receive (bar a bit of PA you have left)

[DragonMamma]

£11,803 + £8,000 = £19,803

£19,803 - £12,500 = £7,303, which is the amount you’ll pay tax on.

[Pandemicpanic]

Ok thanks.

Dh does it for me and when he did it for the 1st time last year, I paid less than that and he told me this year would be even less because I am earning less.
So my expectation was it would be lower than last year which was much lower than that!

Now I've got to find 500.....

Thank you.

[Clymene]

That isn't the tax on £8k. It's the tax on £8k plus your income. It sounds right to me

[Pandemicpanic]

I did set rent and salary separately so ni and any tax would come out of salary at source.

[raspberryrippleicecream]

Have you made sure you've offset any expenses you are allowed too?

[CodenameVillanelle]

@Pandemicpanic

I did set rent and salary separately so ni and any tax would come out of salary at source.

The tax office views your income as a total, not separate amounts. You only get one tax free allowance, not one per income source.

[Pipandmum]

No I believe it is unearned income and earned, but they are both considered income so added together and taxed after your personal allowance is taken out (and other deductions). You do not pay NIC on your unearned income however, so only calculate that on earned income.
It may benefit you to ask an accountant to walk you through your first tax return, as there are certain deductions depending on whether it is furnished or not, managed etc, and for subsequent years you can do it yourself.

[SeasonFinale]

Have you taken off any deductions you are allowed to from.the rent such as any allowable expenses relating to the property? If not you need to do that first

[PleasantVille]

@Pandemicpanic

I did set rent and salary separately so ni and any tax would come out of salary at source.

What do you mean by set them separately? There isn't a choice is there, you can only have wages paid under PAYE, don't you always have to do a tax return for rent, I know my Dbro does

[Pandemicpanic]

Pleasant, I don't know the correct terms but there was an option to pay tax once.

On salary and rent.

I asked on here actually about the pros and cons and I was advised to keep them separate because if I lost a tenant, by the time tax people processed that I could still be paying for non existing rent.

So I kept them separated.

My work takes care of wage and I do a tax return.

[LIZS]

You pay tax on rental income retrospectively. So the amount due now is for year to April 2019 and takes into account your earned income and paye over same period.

[Pandemicpanic]

5871 dh said of taxable income.

[LIZS]

@Pandemicpanic

5871 dh said of taxable income.

?

[Pandemicpanic]

After allowances and rent that's what's left to be taxed on.

[LIZS]

The online system calculates it for you. It will be 20% of your total income less personal allowance, less whatever you have paid by paye.

[Pandemicpanic]

That's what dh said was left

[AlexisCarringtonColbyDexter]

I also do self assessment and that sounds about right to me

[ClashCityRocker]

Yep... Well, i make it £1,174 so you've overpaid £2 through PAYE due to rounding or something of that ilk.

[Pandemicpanic]

He's just said it's actually 1785.

[CherryValanc]

@Pandemicpanic

Pleasant, I don't know the correct terms but there was an option to pay tax once.

On salary and rent.

I asked on here actually about the pros and cons and I was advised to keep them separate because if I lost a tenant, by the time tax people processed that I could still be paying for non existing rent.

So I kept them separated.

My work takes care of wage and I do a tax return.

You mean you declare your rental income through a return, rather than having your PAYE code adjusted.

I understand it's confusing but it's best you understand the ins and outs of your tax situation. It's you that is responsible for them when it's wrong - no matter who filed the return for you. Not that I'm suggesting your DH has done anything wrong - just you are better off understanding it. Have a look at:

www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income#allow-expense

It's written fairly clearly - all it there is a lot of information to take in!

Why did you expect it to be less? was it your PAYE or the rent that was less than last year? Did you claim more expenses to claim on the rental income maybe? (Possibly if it was the first year and you were setting the place up.)